About
Tasked by the European Commission, EFRAG published the VSME in December 2024. At the time, it was not intended to adopt the standard in the form of an EU legislative act. However, as part of its simplification agenda in the field of sustainability reporting, the Commission adopted the VSME in the form of a recommendation in July 2025. The Omnibus I Directive (entered into force 18 March 2026) introduced a statutory value chain cap, giving companies with fewer than 1,000 employees the right to refuse information requests exceeding the scope of a voluntary sustainability reporting standard. On 6 May 2026, the Commission published for consultation a draft delegated act establishing a voluntary sustainability reporting standard for undertakings with no more than 1,000 employees, which will also serve as the statutory value chain cap. The draft is closely based on the VSME but includes certain modifications, including reduced data points aligned with the revised ESRS and clarification of which data points fall within the value chain cap. The consultation closes on 3 June 2026, with Commission adoption planned for Q2 2026. The voluntary standard is intended to apply from financial year 2027 for value chain reporting purposes.
Similar to the European Sustainability Reporting Standards (ESRS) that apply under the CSRD, the VSME sets out requirements that allow reporting undertakings to provide relevant information on: (a) how they have had and are likely to have a positive or negative impact on people or on the environment in the short-, medium- or long-term; and (b) how environmental and social issues have affected or are likely to affect their financial position, performance and cash flows in the short-, medium- or long-term.
The VSME is, however, less comprehensive – and less burdensome to comply with – than the ESRS. The VSME consists of two modules that companies can use to prepare their sustainability reports: the Basic Module and the Comprehensive Module. Applying the Basic Module is a prerequisite for applying the Comprehensive Module. Use of only the Basic Module is intended for micro-undertakings and constitutes a minimum requirement for other undertakings. The Comprehensive Module sets out additional datapoints that are likely to be requested by banks, investors and corporate clients of the undertaking on top of the Basic Module. Many of the data points link to data points in EU legislation such as the SFDR, CRR (Pillar 3 reporting) and the Benchmark Regulation.
The Norwegian Ministry of Finance published an unofficial Norwegian translation of the VSME on 14 May 2025. The Norwegian government recommends that companies reporting sustainability information on a voluntary basis do so in accordance with the VSME.
On 11 December 2025, EFRAG published guidelines for SMEs reporting under the Comprehensive Modules related to disclosures identified as particularly challenging in the public consultation and field test on VSME.
Who does it impact?
The VSME is voluntary, but is intended to be used by SMEs in order to create better opportunities for such companies to obtain green financing. Under the adopted Omnibus I Directive, the VSME forms the basis for a statutory value chain cap: companies within scope of the CSRD that report on their value chains may not request more information from companies with fewer than 1,000 employees than what is set out in the VSME. Protected undertakings have a statutory right to refuse requests exceeding this scope. The Commission published the draft delegated act on 6 May 2026 for public consultation (deadline 3 June 2026), with adoption planned for Q2 2026.
Status: Launched
The VSME was published in December 2024.
Relation to other initiatives and regulations
The VSME is a stand-alone reporting standard, but many of the data points link to data points in EU legislation such as the SFDR, CRR (Pillar 3 reporting) and the Benchmark Regulation.
Participants
Undertakings not subject to CSRD reporting that wish to report on a voluntary basis.
Thommessen's comments
The relevance of the VSME has increased due to the Commission's adoption of the VSME and the reduced scope of entities subject to the CSRD reporting obligations. The VSME will serve two functions: (i) enabling smaller companies to report pursuant to comparable standards and improving their access to green financing and (ii) "shielding" companies not subject to the CSRD from burdensome reporting obligations by limiting the information that companies falling within the scope of the CSRD can request from those companies as part of their value chain reporting. The second function is undoubtedly welcomed by companies in the value chains of CSRD-reporting entities. With respect to the first function, it remains to be seen how widely adopted a voluntary standard will be among target companies and whether, maybe especially in light of recent shifts in perceived public priorities within ESG and sustainability, it will indeed have an effect in improving companies' access to financing.